The previous article in this series, A Historical
Perspective on Insurance: The Great Fire of London, talked about the Great
Fire of London, in late 1666, which left the city literally in smoldering ruins.
This article discusses what happened just after that fire.
Setting the Stage
In the aftermath of the Great Fire, a number of laws and ordinances were
passed directly related to the fire that attempted to eliminate such devastation
from future fires. One law, for example, required that each quarter of the city
be provided with 800 leather buckets and 50 ladders, as well as other firefighting
equipment. Each house had to have buckets, and the occupants were required to
participate in hand-to-hand bucket brigades.
Another law allowed for the incorporation of an organization to indemnify
for losses due to fire. This one set the stage for the first insurance company.
Nicholas Barbon's Influence
Somewhat earlier, Cromwell's parliament had been nicknamed "the Barebone's
Parliament," due to a particularly notorious member, Isaac Praise-God Barebone.
Praise-God Barebone was a deeply religious preacher, and he named his son Hath
Christ Not Died for Thee Thou Wouldst Be Damned Barebone. The son later changed
his name to Nicholas Barbon.
By the time of the Great Fire, Nicholas Barbon, M.D., was a successful doctor
but was already starting to make a name for himself as a prolific writer and
economist. He got involved in the reconstruction of London. As he amassed his
own wealth―many of his writings had to do with wealth, value, and similar topics―he
began to worry that his wealth was tied up in property that could burn in another
In the year following the fire, 1667, Dr. Barbon was instrumental in forming
the first actual insurance company. It was known as "The Insurance Office" and
was located in a small office behind London's Royal Exchange (stock market).
The Development of Fire Brigades and Firemarks
To protect the houses and other buildings it was insuring, The Insurance
Office formed actual fire-fighting teams. They were issued equipment and identifying
badges. Their job was solely to put out fires in the buildings they insured.
Other insurance companies followed. They had names like the Friendly Society
and the Hand-in-Hand, and they also employed their own fire departments.
As Alwin Bulau points out in his seminal insurance historical book, Footprints of Assurance, these company-owned
brigades were not there for the protection of the public, they were specifically
employed by their respective insurance companies. When a fire occurred, all
the nearby fire brigades would rush to the fire, just in case it was their company
that insured the building. If it wasn't, they'd either leave or, more likely,
stay to watch as observers.
It became obvious that there had to be a quick and easy way for these brigades
to be able to identify the houses and buildings that their employers insured.
The various insurance companies began issuing signs, called "firemarks," to
their policyholders. In England, where this all began, most of the firemarks
were made out of tin. The company would issue them, and the policyholder would
mount it under the eaves in the front of the house. (We'll talk more about firemarks
in a later article.)
At best, the whole idea of insurer-owned fire departments was cumbersome;
at worst, it was downright disastrous. Company A's fire department might watch
a house insured by Company B burn today, and next week Company B's department
might watch one of Company A's go up in smoke. Not very efficient.
The solution, of course, was to have municipal―not private―fire departments.
A deal was worked out, and all the insurance companies donated their equipment
to the city. The city hired the firefighters, who were stationed at various
locations around the city. Their job was to fight fire, whether the building
was insured or not.
That didn't eliminate the need for insurance, of course. Nor did it eliminate
the need for firemarks, which continued in use. Given the choice of buildings
to save, the firefighters would always attempt to save an insured building before
an uninsured one. It was customary for insurance companies to pay for ale at
the local pub for any firefighters who attempted to save their insured property
and to provide bonuses for those who were successful at it.
So, what happened to the first insurance company, The Insurance Office? Well,
nobody is exactly sure, but it eventually went out of business. The oldest documented
insurance company today dates back to 1710. Originally known as the Sun Fire
Office, it started not all that long after the original Fire Office, and probably
while the first was still in business. The Sun Fire Office, through many mergers
and acquisitions, is today known as Royal & SunAlliance, Britain's largest insurance